Ford sees U.S. market share stabilizing

DETROIT, July 5 Reuters reported that Ford Motor Co.'s U.S. market share appears to have stabilized for the first time since the late 1990s, despite efforts by General Motors Corp. to run its crosstown rival into the ground, Ford officials said on Friday.

Ford's U.S. sales have been tepid at best so far this year and were down 11.3 percent in June, well below an industry-wide average of 1.7 percent.

But while the market share of the world's second-largest automaker was off about 2 percentage points in the first half of 2002 compared with the first half last year, there are signs the worst may be over.

"We seem to have kind of flattened out at a level that's around 21 percent," George Pipas, Ford's chief industry sales analysts, told Reuters on Friday.

He was referring to Ford's overall share of the U.S. market -- including its lower-volume luxury brands Volvo, Jaguar and Land Rover.

Ford's share, which had eroded steadily from a high of around 25 percent in 1998, dropped sharply over the last two years amid negative fallout from the Firestone tire crisis and a rash of high-profile quality problems.

But Pipas said the company's share rose from 20.7 percent in the first quarter of the year to 21.3 percent for the second quarter, a 0.6 percent gain that was bigger than any of its competitors had eked out.

"Prior to that, you wondered, we seemed to be exceeding the speed limit in terms of market share declines and we didn't know whether we had bottomed out or not," Pipas said.

"Six-tenths of a point doesn't get us back to where we were a year ago, that's for sure, but at least it's heading in the right direction," he added.

It remains to be seen if Ford will parlay a possible gain in its fleet business and sales of its new sport utility vehicles into more market share improvement going foward. But in a market plagued by industry overcapacity and increasing competition from Japanese and Korean automakers, its struggle for market share has probably never been more brutal.

"In this market, as competitive as it is, each tenth of a point is major. It's an incredibly competitive market. Every tenth of a point counts," said Ron Pinelli of industry research firm Autodata.

"ZERO PERCENT"

Ford, was forced to reintroduce free financing rates on most of its 2002 models earlier this week after GM, the world's largest automaker, revived the "zero percent" deals it used to boost consumer confidence and sales after the Sept. 11 attacks.

Chrysler also said it was matching the GM offer, which added to Detroit's already heated price war as the industry heads into the key summer selling season. Ford and Chrysler, both in the midst of wrenching cost-cutting plans, had hoped to offer less aggressive third-quarter incentives.

But Jim O'Connor, Ford's group vice president for North American marketing, sales and service, told Reuters Ford had no choice but to match GM, the undisputed leader of pricing in the U.S. market.

"You either stay in the game or you lose share, and share is your long-term health," O'Connor said.

"I think General Motors is trying just to knock out the other two players of the Big Three," added O'Connor, referring to how GM has used aggressive sales incentives, and a strong new truck lineup, to boost market share and weaken its financially-troubled U.S. rivals.

"To me they're spending a lot of money, but they still own 28 percent of the market," O'Connor added of GM.

"We're trying to stabilize our share and to reduce our costs, so the improvement drops to the bottom line."